(Kitco News) – As the 2024 Presidential election in the U.S. draws near and the debate rages about which candidate will be better for financial markets, one billionaire investor has warned about the negative effect a Harris administration would have on asset prices and threatened to pull his funds from the market if she becomes the next president.
“It depends on the policy; if Harris is elected, I would pull my money from the market,” said billionaire hedge fund manager John Paulson during a Tuesday appearance on Fox Business’ ‘The Claman Countdown.’
“I’d go into cash, and I’d go into gold because I think the uncertainty regarding the plans they outlined would create a lot of uncertainty in the markets and likely lower markets,” Paulson added.
Paulson cited several of the policies announced by the Harris campaign as the reasoning behind his threat. These included plans to implement more centralized price controls and introduce new government spending programs. According to economist estimates, implementing these plans would cost more than $1.7 trillion.
He said the future of the U.S. economy and stock market depends on the winner of the race between former President Donald Trump and current Vice President Kamala Harris.
“It very much depends on who is in the White House and who controls Congress,” Paulson said. “I’d be very concerned if Harris is elected and pursues the tax plans and other economic plans that she articulated.”
Harris has pledged that during her first 100 days in office, she would implement plans to provide $25,000 in federal down payment assistance for first-time homebuyers who pay their rent on time for at least two years, as well as for lower- and middle-income families having children. She has also announced a plan to fix grocery prices and stop price gouging.
One of Harris’ more controversial plans is a proposed tax on unrealized gains, which many economists and analysts have warned would have dire consequences for the investing world.
“If they do implement a 25 percent tax on unrealized gains, that would cause mass selling of almost everything — stocks, bonds, homes, art,” Paulson warned. “I think it would cause a crash in the markets and a pretty quick recession.”
For this reason, he said he would sell his liquid equities in the event of a Harris victory on Nov. 5.
Paulson’s comments are not entirely unexpected – although the threat to pull all funds is seen as extreme by some – as he is strongly pro-Trump and hosted a private evening fundraiser at his Palm Beach mansion near Trump’s own Mar-a-Lago estate in April that raised over $50 million, breaking the single-event fundraising record.
Ultimately, Paulson sees the middle class as being the key voting bloc that will decide the fate of the upcoming election.
“I think the middle class is key for this election,” he said. “And who’s gonna do better for the middle class? When you look at the facts, the Trump policy had come out better for the average American. Under his administration of the four years, average real wages grew about 6.5%. Under Biden, because of the high inflation, real wages have declined from where they were when he started.”
“That’s why so many middle[class] Americans are having so many difficulties with common expenses like rent and food,” he noted.
While Paulson believes that inflation has eased recently, he said there is more that can be done to help reduce it further, and called on the next president to also focus on reducing the federal debt and interest rates.
“The important thing is keeping it down and to do that you need to bring down the deficit, bring down inflation, and bring down the interest rates,” he said.
